JAA lobbies feds to add cost to a round-trip ticket Airlines call the 'facility charge' a tax, but airports say fee is vital.

February 18, 2011

The Jacksonville Aviation Authority is part of a lobbying effort by the airport industry to increase a fee on passengers by 55 percent.

Money raised from the fee - $30 billion since 1992 - is used to fund federally approved construction projects at airports across the country.

The fee, known as a "passenger facility charge," is built into the price of an airline ticket and later given back to airports.

It has been the crux of a pricey airline industry spat. Airlines argue the fee is a tax on their customers, while the airports say it spurs local job creation and helps attracts new business.

Because the charge is applied to each leg of a flight, for a round-trip ticket that includes a layover it would come into play four times. Airports want the current fee cap of $4.50-per-passenger raised to $7, which would add $10 to the price of a round-trip ticket.

Both sides have spent millions on a stable of lobbyists to work the issue. Since 2007, the JAA has spent $280,000 on federal lobbying, records show. The fee cap is listed as a "specific lobbying issue" on all but one of their quarterly reports over that time.

Those reports list a host of issues JAA was lobbying for, including funding for drainage and roadway improvements at Cecil Field, funding for an access road at Jacksonville International Airport and seeking reimbursement for the cost of installing a baggage system.

The proposed increase is part of a much larger Federal Aviation Authority reauthorization bill that Congress has failed to pass since 2007. The increase has been in previous versions of the bill but is not included this year. In his recently unveiled budget, President Barack Obama says he is supportive of the increase, but congressional action is needed.

JAA, which is currently authorized to raise more than $260 million from the fee over 20 years, says the money can help the authority get favorable rates from credit markets to fund construction projects. Because those costs go into a pool of expenses shared by airlines that service the airport, lower rates equal lower airline costs, said Michael Stewart, a JAA spokesman.

"Using [the fees] ... keeps costs low giving us a better advantage in attracting additional airlines and air services," he said.

Nicholas Calio, president of the Air Transportation Association, the industry's biggest trade group, said that argument does not hold water.

"Airports enjoy high credit ratings - significantly higher on average than airline ratings - and have historically had access to those markets for critical projects," he said during 2010 testimony before Congress.

He called the fees taxes that "increase the cost of air travel and reduce consumption of it."

The airport industry disagrees.

"It's hypocritical for the airlines to complain that we propose a $2.50 per passenger per leg fee that will be $10 on a round trip ticket, when they charge $25 to check a bag," said Debby McElroy, executive vice president of policy and external affairs with the Airports Council International.

She also said that because the fee goes toward infrastructure projects, it helps with local job creation.

Millions for JAA

Airports can not charge the fee unless they get federal government approval. Their application must include a predetermined list of projects showing how the money would be spent.

JAA has had two applications approved since 1994. The first allowed them to raise $72.6 million and lasted from 1994 to 2003. They currently have approval to charge the fee until 2023, and they can bring in up to $263 million, according to federal records.

Currently, $28.8 million worth of projects have been approved or are awaiting approval, including, among others, the first phase of an apron construction, replacements of a fire-fighting vehicle and the paving of taxiways.

Source: http://jacksonville.com/news/metro/2011-02-18/story/jaa-lobbies-feds-add-cost-round-trip-ticket